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Federal Justice System Amendment (Efficiency Measures) Bill (No. 1) 2009

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2008-2009

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

SENATE

 

 

 

 

FEDERAL JUSTICE SYSTEM AMENDMENT (EFFICIENCY MEASURES) BILL (NO. 1) 2008

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

Amendments to be Moved on Behalf of the Government

 

 

 

 

(Circulated by authority of the Attorney-General,

the Honourable Robert McClelland MP)

 

 

 

 

 

 

 

 

 

 

 

 

 



FEDERAL JUSTICE SYSTEM AMENDMENT (EFFICIENCY MEASURES) BILL (NO. 1)

 

GENERAL OUTLINE

The Federal Justice System Amendment (Efficiency Measures) Bill (No. 1) 2008 (the Bill) amends various Acts in order to improve the efficient conduct of business in the federal courts and ensures the concurrent jurisdiction of the Federal Court of Australia under the International Arbitration Act 1974.  It also responds to the decision of the Full Court of the Family Court of Australia in Black v Black [2008] FamCAFC 7, where the Court applied a strict compliance test in relation to certain technical requirements for binding financial agreements made under the Family Law Act 1975

The Government amendments proposed to the Bill will address issues that have arisen in submissions to the inquiry of the Senate Standing Committee on Legal and Constitutional Affairs into the provisions of the Bill and following consultation with key stakeholders.  The proposed Government amendments will:

·          amend the Family Law Act 1975 to enable legal practitioners to provide signed statements about the giving of prior independent legal advice to spouse parties to financial and termination agreements either before or after the spouse party signs the agreement

·          amend the Family Law Act 1975 to provide that copies of those statement must also be provided either to the other spouse party or to a legal practitioner of the other spouse party

·          amend the Family Law Act 1975 to provide additional protection for parties who enter into financial and termination agreements by enabling a court to declare, in enforcement proceedings, that an agreement is binding in spite of a failure to meet the procedural requirements relating to the making of the agreement if the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstances from the time the agreement was made)

·          provide that the amendments to the Family Law Act 1975 in Schedule 5 to the Bill will not affect any court orders that have been made on matters covered by a financial agreement or a termination agreement

·          ensure that the amendments to the Family Law Act 1975 in Part 1 of Schedule 5 to the Bill will not inadvertently render invalid financial and termination agreements made between 27 December 2000 and 14 January 2004

·          provide that a financial agreement or a termination agreement made before the amendments to Schedule 5 to the Bill commence will bind the parties who have signed the agreement if the spouse parties obtained independent legal advice prior to signing the agreement

·          provide that the amendments to the Family Law Act 1975 in Schedule 5 to the Bill commence on the 28th day after the Bill receives the Royal Assent, and

·          correct a minor technical point in the amendments to the International Arbitration Act 1974 to clarify that awards will be enforceable in the Federal Court as if they were a judgment or order of the Federal Court.

FINANCIAL IMPACT STATEMENT

The proposed amendments will not have any significant financial impact.



NOTES ON AMENDMENTS

Amendment 1: Clause 2, page 2 (table items 3 to 5) (legal advice requirements)

This amendment replaces items 3 to 5 of the table in subclause 2(1) of the Bill to provide a new commencement date for the amendments to the Family Law Act 1975 in Schedule 5 to the Bill relating to binding financial and termination agreements.  The amendment inserts a new item 3 in the table to provide for the amendments to commence on the 28th day after the Bill receives the Royal Assent .  This will provide time for the legal profession and the courts to be notified about the new procedural requirements that will apply for agreements to be binding on the parties to the agreement.

Amendments 2 and 3: Schedule 2, items 2 and 4, page 6 (lines 12, 22 and 23) (technical amendment)

2.                   These amendments replace the words ‘had been made by’ in items 2 and 4 of Schedule 2 to the Bill with ‘were a judgment or order of’.  This will clarify that foreign awards within the meaning of the International Arbitration Act 1974 will be enforceable in the Federal Court of Australia as if they were a judgment or order of the Federal Court of Australia .

Amendment 4: Schedule 5, page 12 (after line 11), after item 1 (legal advice requirements)

3.                   This amendment inserts item 1A into Part 1 of Schedule 5 to the Bill which will amend subsection 90G(1) of the Family Law Act 1975 as a consequence of the amendments made by item 4A (inserted by Amendment 6) .

Amendment 5: Schedule 5, item 2, page 12 (lines 14 to 22) (legal advice requirements)

4.                   This amendment replaces proposed paragraph 90G(1)(b) inserted by item 2 of Schedule 5 to the Bill with new paragraphs 90G(1)(b), 90G(1)(c) and 90G(1)(ca).  These amended paragraphs will ensure that the technical requirements for a financial agreement in subsection 90G(1) of the Family Law Act 1975 support the additional protections for parties that are proposed for insertion by these Government amendments.

5.                   New paragraph 90G(1)(b) will require each spouse party to a financial agreement to obtain independent legal advice from a legal practitioner about the effect of the agreement on their rights, and the advantages and disadvantages, at the time that the advice was provided, of making the agreement.  This will ensure that spouse parties will receive independent legal advice before the agreement is signed so that they are able to make an informed decision.

6.                   New paragraph 90G(1)(c) will require each spouse party to obtain a signed statement from the legal practitioner giving the advice stating that the advice was given (regardless of whether the statement is annexed to the agreement).  This will ensure that each spouse party obtains a statement evidencing that the advice has been received. The signed statement may be provided by the legal practitioner either prior to or after the execution of the agreement by the spouse parties.  This amendment is necessary to ensure that agreements are not rendered defective simply on the basis of the order in which the spouse parties sign the agreement and are given a statement signed by their respective legal practitioners.

7.                   New paragraph 90G(1)(ca) will require that a copy of the signed statement given to a spouse party must be provided to the other spouse party or to their legal practitioner.   This requirement will ensure that there is objective evidence readily available to each spouse party that legal advice was provided to the other spouse party if they later seek to enforce the terms of the agreement, without overly complicating the requirements for such an agreement to be binding.

8.                   Agreements that have complied with the requirements in current paragraphs 90G(1)(c) and 90G(1)(e) of the Family Law Act 1975 (relating to annexure of certificates to, and distribution of copies of, the agreement) would meet the ‘new’ requirement to provide copies of the signed statements.

Amendment 7: Schedule 5, item 5, page 12 (line 29) to page 13 (line 5) (legal advice requirements)

9.                   This amendment replaces proposed paragraph 90J(2)(b) inserted by item 5 of Schedule 5 to the Bill with new paragraphs 90J(2)(b), 90J(2)(c) and 90J(2)(ca).  These amended paragraphs will ensure that the technical requirements for a termination agreement in subsection 90J(2) of the Family Law Act 1975 support the additional protections for parties that are proposed for insertion by these Government amendments.

10.               New paragraph 90J(2)(b) will require spouse parties to a termination agreement to obtain independent legal advice from a legal practitioner about the effect of the agreement on their rights, and the advantages and disadvantages, at the time that the advice was provided, of making the agreement.  This will ensure that spouse parties will receive independent legal advice before the agreement is signed so that they are able to make an informed decision.

11.               New paragraph 90J(2)(c) will require each spouse party to obtain a signed statement from the legal practitioner giving the advice stating that the advice was given (regardless of whether the statement is annexed to the agreement).  This will ensure that each spouse party obtains a statement evidencing that the advice has been received. The signed statement may be provided by the legal practitioner either prior to or after the execution of the agreement by the spouse parties.  This amendment is necessary to ensure that agreements are not rendered defective simply on the basis of the order in which the spouse parties sign the agreement and are given a statement signed by their respective legal practitioners.

12.               New paragraph 90J(2)(ca) will require that a copy of the signed statement given to a spouse party must be provided to the other spouse party or to their legal practitioner.   This requirement will ensure that there is objective evidence readily available to each spouse party that legal advice was provided to the other spouse party if they if the parties later seek to enforce the terms of the agreement, without overly complicating the requirements for such an agreement to be binding.

13.               Agreements that have complied with the requirements in current paragraphs 90J(2)(c) and 90J(2)(e) of the Family Law Act 1975 (relating to annexure of certificates to, and distribution of copies of, the agreement) would meet the ‘new’ requirement to provide copies of the signed statements.

Amendments 6 and 8: Schedule 5, pages 12 (after item 4) and 13 (after item 7) (legal advice requirements)

14.               Amendments 6 and 8 insert new items 4A, 4B and 7A into Part 1 of Schedule 5 to the Bill .  These items will amend the Family Law Act 1975 to enable a court to declare, in enforcement proceedings, that a financial or termination agreement is binding in spite of a failure to meet some of the technical requirements if the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstances from the time the agreement was made).

15.               Item 4A will insert new subsections 90G(1A), 90G(1B) and 90G(1C) into section 90G of the Family Law Act 1975 , which sets out the requirements for a binding financial agreement.  New subsection 90G(1A) will enable a court to declare, in enforcement proceedings, that a financial agreement is binding on the parties to the agreement if:

·            the agreement is signed by all parties

·          there is a failure to meet the requirements as set out in one or more of paragraphs 90G(1)(b), 90G(1)(c) and 90G(1)(ca) of the Family Law Act 1975

·          the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstances from the time the agreement was made), and

·          the agreement has not been terminated and has not been set aside by a court.

16.               Item 7A will insert new subsections 90J(2A), 90J(2B) and 90J(2C) into section 90J of the Family Law Act 1975 , which sets out the requirements for a binding termination agreement.  New subsection 90J(2A) will enable a court to declare, in enforcement proceedings, that a financial agreement is binding on the parties to the agreement if:

·            the agreement is signed by all parties

·          there is a failure to meet the requirements as set out in one or more of paragraphs 90J(2)(b), 90J(2)(c) and 90J(2)(ca) of the Family Law Act 1975

·          the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstances from the time the agreement was made), and

·          the agreement has not been terminated and has not been set aside by a court.

Item 4B will amend subsection 90J(2) of the Family Law Act 1975 as a consequence of the amendments made by item 7A. 

Amendment 9: Schedule 5, item 8, page 13 (line 11) (legal advice requirements)

17.               Item 8 of Schedule 5 to the Bill sets out the application of amendments made by items 2 to 7.  Amendment 9 replaces ‘2 to 7’ in subitem 8(1) of Schedule 5 to the Bill with ‘1A to 7A’, to ensure that the items inserted into the Bill by Amendments 4 to 8 will have the same application as items 2 to 7 of Schedule 5 to the Bill.

Amendment 10: Schedule 5, page 13 (after line 16), at the end of item 8 (legal advice requirements)

18.               This amendment inserts new subitems 8(3), 8(4), 8(5), 8(6), 8(7), 8(8) and 8(9) into item 8 in Part 1 of Schedule 5 to the Bill.

19.               Subitem 8(3) will provide that if a court has made a property settlement or a spousal maintenance order before the commencement of item 8 on the basis that a financial agreement or a termination agreement did not bind the spouse parties, the agreement is, after the commencement of item 8, taken not to bind the spouse parties.  This means that item 8 will not operate to ‘revive’ any agreements that have been overtaken by court orders thereby giving certainty to any court orders .

20.               Subitems 8(4) and 8(5) will ensure that the retrospective application of the amendments proposed by the Bill will not invalidate financial agreements and termination agreements which complied with the requirements for independent legal advice in the Family Law Act 1975 prior to 14 January 2004.  Prior to 14 January 2004 (the commencement date of the Family Law Amendment Act 2003 , which amended the requirements for financial and termination agreements), parties to financial and termination agreements were required to obtain independent legal advice to address, among other things, whether or not an agreement was ‘to the advantage, financially or otherwise, of that party to make the agreement.’

21.               Subitems 8(6), 8(7), 8(8) and 8(9) will provide for the circumstances in which a financial agreement or a termination agreement made before the commencement of item 8 will bind the parties to the agreement.  Such an agreement will bind the parties to it if:

·            each party has signed the agreement, and

·            each spouse party, before signing the agreement, obtained independent legal advice from a legal practitioner about the effect of the agreement on their rights, and the advantages and disadvantages, at the time the advice was provided, of making the agreement.

A court will be able to declare, in enforcement proceedings, that the agreement is binding on the parties where each spouse party did not obtain that prior independent legal advice if it is satisfied it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstance from the time the agreement was made).

Amendment 11: Schedule 5, Part 1, page 13 (after line 16), at the end of the Part (legal advice requirements)

22.               This amendment inserts new item 8A into Part 1 of Schedule 5 to the Bill which will provide for additional circumstances in which a financial and termination agreement made on or after 14 January 2004 and before commencement of item 8A will bind the parties to the agreement.  Amendments to the Family Law Act 1975 which commenced on that date changed the matters about which spouses had to obtain prior independent legal advice for the agreement to bind them.  Some legal practitioners continued to rely on old precedents relating to the provisions of the Act as they stood before 14 January 2004 for agreements made for some time after that date.  Subitems 8A(2), 8A(3), 8A(5) and 8A(6) will provide that the agreement binds the spouses if the prior independent legal advice obtained by one or both spouses was about matters on which advice was required under the Act to be obtained before 14 January 2004. Subitem 8A(7) provides that Amendment 11 does not apply to agreements set aside before the commencement of item 8A.  Accordingly, it does not give rise to the acquisition of any property rights.

Amendment 12: Schedule 5, page 14 (after line 10), after item 9 (legal advice requirements)

23.               This amendment inserts new item 9A into Part 2 of Schedule 5 to the Bill which will amend subsection 90UJ(1) of the Family Law Act 1975 as a consequence of the amendments made by item 12A (inserted by Amendment 14) .

Amendment 13: Schedule 5, item 10, page 14 (lines 13 to 21) (legal advice requirements)

24.               This amendment replaces proposed paragraph 90UJ(1)(b) inserted by item 10 of Schedule 5 to the Bill with new paragraphs 90UJ(1)(b), 90UJ(1)(c) and 90UJ(1)(ca) . The new paragraphs will have the same effect, in relation to Part VIIIAB financial agreements between de facto couples, as those inserted by Amendment 5 in relation to financial agreements between married couples .

Amendment 14: Schedule 5, page 14 (after line 25), after item 12 (legal advice requirements)

25.               This amendment will insert new items 12A and 12B into Part 2 of Schedule 5 to the Bill.  The new items will have the same effect, in relation to Part VIIIAB financial agreements between de facto couples, as items 4A and 4B inserted into the Bill by Amendment 6 in relation to financial agreements between married couples. 

Amendment 15: Schedule 5, item 13, page 14 (line 28) to page 15 (line 4) (legal advice requirements)

26.               This amendment replaces proposed paragraph 90UL(2)(b) inserted by item 13 of Schedule 5 to the Bill with new paragraphs 90UL(2)(b), 90UL(2)(c) and 90UL(2)(ca) .  The new paragraphs will have the same effect, in relation to Part VIIIAB termination agreements between de facto couples, as those inserted by Amendment 7 in relation to termination agreements between married couples .

Amendment 16: Schedule 5, pages 14 (after line 8), after item 15 (legal advice requirements)

27.               This amendment will insert new item 15A into Part 2 of Schedule 5 to the Bill.  The new item will have the same effect , in relation to Part VIIIAB termination agreements between de facto couples, as item 7A inserted into the Bill by Amendment 8 in relation to termination agreements between married couples .

Amendment 17: Schedule 5, item 17, page 15 (line 26) (legal advice requirements)

28.               Item 17 of Schedule 5 to the Bill sets out the application of amendments made by items 10 to 15.  Amendment 16 replaces ‘10 to 15’ in subitem 17(1) of Schedule 5 to the Bill with ‘9A to 15A’, to ensure that the items inserted into the Bill by Amendments 12 to 16 will have the same application as items 10 to 15 of Schedule 5 to the Bill.

Amendment 18: Schedule 5, item 17, page 15 (after line 34), at the end of item 17 (legal advice requirements)

29.               This amendment will insert new subitems 17(3), 17(4), 17(5), 17(6) and 17(7) into item 17 in Part 2 of Schedule 5 to the Bill.  These subitems will have the same effect, in relation to Part VIIIAB financial agreements and Part VIIIAB termination agreements between de facto couples, as subitems 8(3), 8(6), 8(7), 8(8) and 8(9) inserted into the Bill by Amendment 10 in relation to married couples.